Colleagues in government, friends from the media, fellow Filipinos, good morning.
We have overcome our country’s greatest economic and health challenges.
The headwinds we faced were strong, but our quick rebound from the Omicron surge in January proved that we can live and deal with the virus. With our strengthened healthcare capacity and accelerated vaccination program, we were able to contain the surge and safely reopen the economy.
On February 1, we shifted our economic centers to alert level 2. By the end of March, around 70 percent of the economy was placed in alert level 1. This quick turnaround in the first quarter shows that we can win both the economic and health battles.
Performance of the economy
Having adeptly managed the risks posed by COVID-19, the Philippine economy grew by 8.3 percent year-on-year in the first quarter of 2022. This is a significant reversal from the 3.8 percent contraction in the same period last year. We have surpassed the pre-pandemic gross domestic product level.
Growth in the first quarter exceeded the median analyst forecast of 6.7 percent, making the Philippines the fastest growing economy in the East Asia Region for the period.
On a seasonally adjusted quarter-on-quarter basis, the economy grew by 1.9 percent compared to the fourth quarter of 2021.
Other economic indicators support this strong recovery. Google mobility data improved further when we lowered the alert levels. Visits to the transit stations are now 30 percent higher than the pre-pandemic level, [that is the black line that you see compared to the red, which is 2020, and blue, which is 2021 for the same month,] while visits to workplaces have also exceeded the pre-pandemic level by around 20 percent.
The unemployment rate in March 2022 fell to 5.8 percent, the lowest since the start of the pandemic. Employment creation is now at 4.4 million above the pre-pandemic level.
We have restored many jobs and livelihood by shifting to a more endemic mindset, accelerating vaccination, and implementing granular lockdowns that only targeted the areas of highest risk while allowing the majority of our people to work and earn a living.
Other positive developments include manufacturing, which saw a volume of production index growth of 336 percent in March of 2022; external trade, with a growth rate of 18.6 percent in March of 2022; and remittances, which hit 2.8 billion US dollars in February of 2022. All of these attest to the sustained gains from the government’s proactive response to recover fully from the pandemic.
Growth in the first quarter of 2022 was broad based as most sectors rebounded from their contractions in the same period last year.
On the production side, all sectors expanded, driven by industry and services at 10.4 percent and 8.6 percent, respectively. Meanwhile, agriculture slightly improved by 0.2 percent as growth was hindered by the African Swine Fever and elevated prices of agricultural commodities such as corn, pork, and sugar.
On the expenditure side, growth was driven by private consumption which went up by 10.1 percent, a stark reversal from the -4.8 percent figure in the same period last year. With much relaxed quarantine restrictions and more vaccinated Filipinos, family activities, leisure, travel and tourism have all grown significantly.
Other expenditure items, such as investments and external trade, also expanded. Investments recorded a robust growth of 20 percent from -13.9 percent in 2021. Exports expanded by 10.3 percent, and imports grew by 15.6 percent.
In contrast, growth in government expenditure temporarily slowed down to 3.6 percent from 16.1 percent last year, as public construction contracted by 4.9 percent, as the election spending ban began towards the end of the first quarter. We expect both of these to accelerate in the second half of the year.
Prospects and recommendations
Our strong economic performance moves us closer to achieving our growth target of 7 to 9 percent this year, but we will not rest on our laurels. We will continuously work hard to strengthen our domestic economy against heightened external risks such as the Russia- Ukraine conflict, China’s slowdown, and monetary normalization in the United States.
To sustain our growth momentum, President Duterte issued Executive Order (EO) No. 166 to implement the Economic Development Cluster’s (EDC) 10-point policy agenda for a strong recovery. We have made meaningful progress in most indicators. We can clearly see how hard-hit sectors like tourism and leisure have recovered from a sharp drop in demand.
A significant piece missing in our recovery is the resumption of face-to-face schooling. More than the foregone economic activity due to school closures, we are very much concerned about the learning loss and impact on future productivity of our children.
Under alert level 1, children are allowed to engage in leisure and recreational activities in all indoor and outdoor venues, but the most important activity of children–studying–continues to be restricted. Hence, we reiterate our call for the urgent resumption of face-to-face schooling plus a catch-up plan to regain lost learning in the past two years. This will help secure better opportunities for future generations and ensure that our demographic dividends will not be wasted.
Managing inflation also remains one of our top priorities. The economic team has recommended the extensions of Executive Orders 134 and 135 to expand our supply of pork and rice. The EDC also recommended a temporary reduction of the most favored nation tariff rate for corn, a primary ingredient in animal feeds. All these will help ease inflationary pressures and stabilize food prices.
We continue to implement various targeted subsidy programs for the public transport and agriculture sectors to cushion the impact of rising oil prices. As of April 30, 2022, around 180,000 public utility vehicle drivers and operators have received their 6,500 peso fuel subsidy.
The Department of Energy also continues its efforts to secure 1 to 4 peso per liter discounts from private oil companies for the public transport sector. Likewise, the Department of Agriculture is implementing a fuel subsidy program for 159,000 farmers and fisherfolk. We stand ready to support our people should volatility continue.
When the Duterte administration took office in 2016, it set an ambitious target of lifting six million Filipinos out of poverty and becoming an upper-middle income country by 2022. Guided by the bold zero to ten-point socioeconomic agenda, we fought hard to enact game-changing reforms that were decades in the making. [So this chart gives you an idea of the progress. All the green ones are accomplished.]
Even as the world was hit hard by the pandemic, our resolve to pursue reforms did not waver and even bolstered our economy’s prospects. The pandemic may have pushed back our timetable, but not our targets and resolve.
The bold policy reforms we instituted over the past six years will drive our economy forward with vigor. We have set the sails for the next administration to achieve rapid and more inclusive growth in 2022 and beyond.
The Philippine economy is a strong and steady ship ready for whatever storms that might lie
ahead. Thank you.